1. From cash to DigiPay, complex tax to GST, disruption is the new normal in India: Sunil Kant Munjal

From cash to DigiPay, complex tax to GST, disruption is the new normal in India: Sunil Kant Munjal

In the Industrial Revolution of the late 18th and early 19th centuries, one seminal force impacted everything.

By: | Published: November 13, 2017 4:05 AM
Industrial Revolution, GST Council, E-way, E-way bill In the Industrial Revolution of the late 18th and early 19th centuries, one seminal force impacted everything.

In the Industrial Revolution of the late 18th and early 19th centuries, one seminal force impacted everything. Today, our world is undergoing an even more dramatic transformation due to the consolidation of many disruptive forces, especially in domains like technology and urbanisation, and the movement of trade, people, finance and data. As per a report by McKinsey, compared with the Industrial Revolution, this change is happening 10 times faster and at 300 times the scale, or roughly 3,000 times the impact. Although we are aware that these disruptions are occurring, most of us fail to comprehend their full magnitude and the second- and third-order effects that might result. Much as waves can amplify one another, these trends are gaining strength, magnitude and influence as they interact with, coincide with, and feed upon one another. Unfortunately, it is becoming impossible to plan, strategise and forecast the future with tools and lessons from the past. From where we are at, it is clear that the power of imagination is moving beyond the realm of past knowledge and experience.

For example, pandemics and global cyber threats are as much a part of global reality as the fear of getting deliberately mowed down by a radicalised driver on a busy street. Today’s geopolitics is dramatically different from the geopolitics of the previous decade; and the shift away from free trade and capitalism to protectionism has been sudden and unprecedented. Disruption today is all-pervasive. Be it networking, hailing cabs, paying bills, watching movies, planning our holidays … everything is done in a way quite different from the previous decade. While this form disruption continues unabated at ‘geek speed’, there are fundamental disruptions taking place in India that are changing society, politics, business and governance functions. Upheavals are evident everywhere. From cash to digital payments; from a multiple and complex tax regime to a single national indirect tax, the Goods and Services Tax (GST); from multiple and dubious identities to an iris and thumb verified identity that is being used for securing subsidies, opening bank accounts, and getting tickets, phone connections and driving licences.

GST, started on July 1, is the most revolutionary tax reform since Independence and will make the country a single unified economy. Companies are fast migrating to GST and the first few days have seen almost 22 states do away with octroi posts that held up trucks, delaying economic activity and growth. The path-breaking tax reform could potentially boost GDP by a few notches. There’s disruption on the work front: more graduates today want to be entrepreneurs rather than take up jobs. There’s disruption in the gender space, as girls and women conquer male bastions. The political applecart in India has also been toppled—if not permanently, then at least for the short and medium term. From the era of coalition politics that dominated India for two decades, we’re back to the era of strong one-party dominance, both at the Centre and at the federal level. Disruptions are the new normal; and, as citizens of India and the world, we have no option but to be more adaptive and responsive. Many disruptions hold the promise of a better future. Consider the shift from cash payments to digital, which will dramatically bring down the inventory carrying costs of currency and fast-forward the formalisation of India’s economy.

While the initial trigger was the demonetisation announced on November 8, 2016, the government has kept up speed on this front—introducing new tools to enable people to opt for digital payments over cash, whether it is UPI, BHIM or Aadhaar Pay. Even the Finance Bill has reduced cash transaction limits; latest evidence from the ground show this is working smoothly. For instance, as per RBI, cash in use on March 31, 2017, was 26% less than November 2016; between November and February, the value of UPI transactions increased from Rs 90 crore to Rs 1,310 crore; debit cards, which were till recently used primarily to withdraw cash from ATMs, are now being used to make payments directly, and non-ATM card usage was up from 42% to 60% four months after demonetisation. Another significant disruption was unleashed in 2014, with a goal of making India open defecation free (ODF) by October 2, 2019, the 150th birth anniversary of Mahatma Gandhi. The mission is fundamentally disruptive, because it changes basic lifestyle habits of millions of Indians—and is the single largest movement of its kind anywhere in the world. Taking a cue from this mission, the newly elected government in India’s largest state, Uttar Pradesh, banned chewing tobacco, gutkha and paan across colleges and government offices.

Even if real outcomes of these initiatives fall short of intended goals, there is no doubt that this will improve the quality of life across India. For example, when Aadhaar was introduced as a 12-digit unique identity in January 2009, there was considerable debate and scepticism about its efficacy. Now that a billion people have this identity, and since its authenticity and credibility is established beyond doubt, it is quietly heralding a revolution in transparency. While disruptions are causing upheavals across society, government and business, there is a need to trigger many other revolutions. Radical changes are needed in the way government healthcare is managed, the manner in which students are taught, the way we allocate water to citizens, the way we develop land, the manner in which we dispose garbage, the way we own and rent homes and assets, etc, we need ecosystems of the future that are cost-effective, scalable and sustainable. Such disruptive moves are not an end in themselves, but the casting of a new economic order in India, and the faster we adapt and embrace change in our lives, the smoother will be our march towards the future.

  1. No Comments.

Go to Top